Compensation for Professional Employees

The Service Contract Act of 1965 was enacted to ensure that Government contractors compensate their blue blue-collar workers and some white-collar service workers fairly. However, the SCA does not cover bona fide executives, administrative, or professional employees.

Professional employees are those having a recognized status based upon acquiring professional knowledge through prolonged study. Examples include accountancy, actuarial computation, architecture, dentistry, engineering, law, medicine, nursing, pharmacy, and the sciences. To be a professional employee, a person must not only be a professional but must be involved essentially in discharging professional duties.

It is the Government's policy that all professional employees be compensated fairly and properly. To this end, contracting officers will sometimes include in solicitations a requirement for offerors to submit for evaluation a total compensation plan setting forth proposed salaries and fringe benefits for professional employees working on the contract. This solicitation clause is found at FAR 52.222-46, Evaluation of Compensation for Professional Employees. This is a required clause when the contract is expected to exceed $700 thousand and the service to be provided will require meaningful numbers of professional employees.

If this clause is included in a solicitation, offerors must submit for evaluation a total compensation plan setting forth proposed salaries and fringe benefits for professional employees who will be working on the contract. Supporting information will include data such as recognized national and regional compensation surveys and studies of professional, public, and private organizations, used in establishing the total compensation structure. Plans indicating unrealistically low professional employee compensation may be assessed adversely as one of the factors considered in making an award.

The Government has a right to be concerned about unrealistically low wages. Re-competition of service contracts may in some cases result in lowering the compensation paid to professional employees and lower wages can be detrimental to obtaining the quality of professional services needed for adequate contract performance. Therefore it is in the Government's best interest that professional employees be properly and fairly compensated.

So what does the Government look for when evaluating compensation plans? The Government will evaluate plans to assure that they reflect a sound management approach and understanding of contract requirements including an assessment of offerors' ability to provide uninterrupted high-quality work. It will be evaluated in terms of its impact on recruiting and retention, its realism, and its consistency. Other factors that the Government might consider when evaluating a compensation plan include:

• The capability of the compensation structure to obtain and retain suitably qualified personnel to meet mission objectives.
• Salary rates or ranges that take into account differences in skills, complexity of various disciplines, and professional job difficulty.
• Where proposed compensation levels are lower than those of predecessor contractors, evaluating on the basis of maintaining program continuity, uninterrupted high-quality work and availability of replacements.

Unrealistic compensation plans will probably be viewed as evidence of failure to comprehend the complexity of contract requirements and failure to submit a plan at all, will cause the rejection of a proposal.

The Government estimates that about 10,000 (or so) compensation plans are submitted for evaluation each year.